Return on Equity by Industry: 2026 Sector Benchmarks

ROE only makes sense relative to peers — 15% is outstanding for a utility and disappointing for a software company. This table shows the low, median, and high return on equity for all 11 GICS sectors, and the box below benchmarks any ticker against its own industry in one click.

By Basis Report Editorial DeskReviewed by Basis Report Methodology TeamMethodology

Typical ROE ranges by GICS sector (2026). Highlighted row = the ticker you looked up.
Sector	Low	Median	High
Technology	12%	28%	55%
Healthcare	10%	20%	38%
Financials	8%	12%	18%
Consumer Discretionary	12%	22%	40%
Consumer Staples	15%	28%	45%
Energy	5%	14%	28%
Industrials	10%	18%	32%
Materials	8%	15%	28%
Utilities	8%	11%	15%
Real Estate	3%	7%	12%
Communication Services	10%	20%	35%

Ranges are sector estimates and will vary with the business cycle and the exact company set. Note: REITs and utilities are structurally lower due to capital intensity and regulated returns. Compute ROE for any ticker with the ROE Calculator, or screen for high-ROE stocks with the ROE Screener.

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Frequently asked questions

What is a good return on equity?

A good ROE is one that sits above the median for the company's own sector — not a universal number. As a rough guide, an ROE above 20% is considered strong in most sectors (Technology median: 28%, Consumer Staples: 28%), while 10–20% is average and below 10% is weak. Two important exceptions: REITs and utilities structurally earn lower ROEs (medians of 7% and 11%) because they hold large asset bases and operate in regulated or capital-intensive environments. Always compare within the sector, not across them.

Why does ROE vary by industry?

ROE varies because asset intensity, leverage norms, and margin profiles differ dramatically across sectors. Technology and consumer-staples companies can earn high returns on thin equity bases partly because they carry intangible assets (brands, IP) that don't appear on the balance sheet. Financial companies use leverage as a core part of their business model, which mechanically boosts ROE. Utilities and real estate companies deploy huge amounts of tangible capital with regulated or contracted returns that compress ROE. The DuPont formula — ROE = net profit margin × asset turnover × equity multiplier — unpacks exactly which driver is pushing a company's ROE above or below its peers.

How is ROE calculated?

ROE is net income divided by average shareholders' equity, expressed as a percentage. For example, a company earning $500M of net income on $2.5B of average equity has an ROE of 20%. 'Average' equity uses the beginning and ending equity balance for the period to smooth out large capital raises or buybacks mid-year. Negative equity (which can occur when a company has bought back more stock than it has retained earnings) produces a negative or misleading ROE, so always verify the sign of the equity base. The formula is: ROE = Net Income ÷ Average Shareholders' Equity × 100.

What is the average ROE for S&P 500 companies?

The S&P 500 as a whole has historically posted an average ROE in the range of 15–20%, but this aggregation hides wide sector dispersion. Technology and consumer-staples companies frequently exceed 25–30%, while utilities, real estate, and financials cluster in the 7–15% range. The composite index ROE also shifts with the economic cycle — it contracts sharply in recessions when earnings fall, and expands during earnings recoveries. For the most actionable benchmark, use the sector-specific ranges in the table above rather than the index average.

How to Use ROE Benchmarks

Return on equity — net income divided by average shareholders' equity — measures how efficiently a company turns the capital its owners have invested into profit. A high and rising ROE signals that management is compounding equity value at an above-average rate; a declining ROE often warns of margin pressure, capital misallocation, or deteriorating competitive position before these problems are obvious in the share price.

The most common mistake with ROE is comparing it across sectors. Capital-light technology and consumer-staples businesses can post 25–30%+ ROE because their asset bases are relatively thin, while utilities and real estate companies hold enormous physical assets that structurally compress ROE into the high single digits. Find your company's sector row first, then judge whether it sits above or below the peer median. A consistent position above the median — especially if maintained without excessive leverage — is one of the clearest signals of a durable competitive advantage. Use the ROE Calculator to compute ROE from any ticker's financials.

ROE has one important caveat: leverage inflates it. A company can double its ROE simply by taking on debt, even with no improvement in operating performance. The DuPont framework unpacks ROE into profit margin, asset turnover, and equity multiplier — letting you see whether a high ROE is driven by genuine efficiency or just financial leverage. For the deepest read on capital efficiency, pair ROE with ROIC, which removes the distortion of debt from the calculation. The ROIC guide explains when ROIC is the better metric and when ROE is sufficient.

More tools & guides

ROE Calculator

Compute return on equity from any ticker's live financials

ROE Screener

Mid-cap stocks ranked by trailing ROE — filter by sector

ROIC Calculator

Capital efficiency without the distortion of financial leverage

ROIC Guide

When ROIC beats ROE as a capital efficiency signal — with worked examples